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Was AstraZeneca Smart to Sell Its Moderna Shares?

By Keith Speights and Brian Orelli, PhD - Mar 13, 2021 at 7:31AM

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It's a definite maybe.

AstraZeneca (AZN 1.78%) ranked as one of the earliest and biggest investors in Moderna (MRNA 4.42%). But now, the big British drugmaker has reportedly sold all of its shares of the up-and-coming biotech. In this Motley Fool Live video recorded on March 3, 2021, contributors Keith Speights and Brian Orelli discuss whether or not AstraZeneca was smart to sell its stake in Moderna and if other investors should follow suit.

Keith Speights: All right. Let's move on to our second topic. This involves two different players in the COVID-19 vaccine space. This came from a report from The Times, which is a British publication. AstraZeneca reportedly just sold its stake in Moderna for around $1.2 billion. Merck (MRK 0.74%) also sold its stake in Moderna last year. Do you think that was a smart move by AstraZeneca, to dump their shares of Moderna?

Brian Orelli: I think that pharmaceutical companies aren't investors so a lot of times, these investments are made as part of the deal with the company to do deals. I know Merck's definitely was. So I think that AstraZeneca probably has much better uses of that $1.2 billion in cash that it can use to reinvest into its pipeline to license or acquire other drugs compared to just letting it sit and try to earn money by watching Moderna stock price go up.

Speights: Yeah. AstraZeneca was a really early investor in Moderna. I think their relationship goes back to 2013, if I remember correctly. They partnered with Moderna on some programs way back when. This was well before Moderna went public, by the way. Then I think in 2016, they up their stake and increased how much they had invested.

But I think you're right, I think they just saw some better uses for their money. Of course, AstraZeneca is hoping to close its acquisition of Alexion (ALXN) in the not-too-distant future. That's a pretty expensive deal, I think around 39 billion or so. Part of it is stock, part of it is cash. Freeing up $1.2 billion could help with maybe financing that deal or using in other ways.

Let me ask you this, Brian. AstraZeneca made their move for their own reasons. Investors who already own Moderna, should they follow suit because this big drugmaker has sold its stake?

Orelli: Only if they are in the same situation and they think that they can deploy that capital in something that's going to make them more money than Moderna. You want to follow AstraZeneca's advice, you should do it basically for the exact same reason that you think that there's opportunities for a company that's going to share price and grow faster than Moderna's.

Speights: Do it for your own reasons if you're going to do, basically.

Orelli: Right.

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Stocks Mentioned

Moderna, Inc. Stock Quote
Moderna, Inc.
$142.28 (4.42%) $6.02
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
$93.00 (0.74%) $0.68
Alexion Pharmaceuticals, Inc. Stock Quote
Alexion Pharmaceuticals, Inc.
AstraZeneca PLC Stock Quote
AstraZeneca PLC
$65.64 (1.78%) $1.15

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